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How Different Are the Wage Curves for Formal and Informal Workers? Evidence from Turkey

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Author Info

  • Baltagi, Badi H.

    ()
    (Syracuse University)

  • Baskaya, Yusuf Soner

    ()
    (Central Bank of Turkey)

  • Hulagu, Timur

    ()
    (Central Bank of Turkey)

Abstract

This paper presents wage curves for formal and informal workers using a rich individual level data for Turkey over the period 2005-2009. The wage curve is an empirical regularity describing a negative relationship between regional unemployment rates and individuals' real wages. While this relationship has been well documented for a number of countries including Turkey, less attention has focused on how this relationship differs for informal versus formal employment. This is of utmost importance for less developed countries where informal employment plays a significant role in the economy. Using the Turkish Household Labor Force Survey observed over 26 NUTS-2 regions, we find that real hourly wages of informal workers in Turkey are more sensitive to variations in regional unemployment rates than wages of formal workers. This is true for all workers as well as for different gender and age groups.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6836.

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Length: 20 pages
Date of creation: Sep 2012
Date of revision:
Publication status: published in: Papers in Regional Science, 2013, 92, 271-283.
Handle: RePEc:iza:izadps:dp6836

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Keywords: wage curve; formal/informal employment; regional labor markets;

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  1. Pradhan, M.P. & Soest, A.H.O. van, 1995. "Formal and informal sector unemployment in urban areas of Bolivia," Open Access publications from Tilburg University urn:nbn:nl:ui:12-80489, Tilburg University.
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Cited by:
  1. Afsin Sahin & Aysit Tansel & M. Hakan Berument, 2013. "Output-Employment Relationship across Sectors: A Long- versus Short-Run Perspective," Koç University-TUSIAD Economic Research Forum Working Papers 1311, Koc University-TUSIAD Economic Research Forum.

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